To prepare your business taxes, we've provided a few resources to get you ready.
Get your business ready for taxes
Gather your income and expenses
First, gather your income and expense documents. This could be from bank statements, credit card statements, invoices, or receipts.
Address how to pay yourself
If you made an election to be treated as an S corporation, it's important that you address how you pay yourself, such as by issuing a reasonable salary through payroll, taking cash distributions out of the LLC's bank account, or a combination of both. The correct choice depends on many factors you will want to consider and discuss with your tax expert. Take a look at these articles for helpful tips:
Record your transactions
When recording transactions, only include business income and expenses. You can do this year-round to ease the burden during tax season.
Personal expenses are not deductible on your personal taxes. It's important not to combine your personal and business accounts to ensure your books and records are accurate.
Organize your income and expenses
There are several options to help you make sure all of your income and expenses are ready for tax time. Here are a few recommendations.
- Start using LZ Books. LZ Books is accessible from your LegalZoom.com account.
- Sign up for QuickBooks Online. If you have QuickBooks Online, you will need to record your transactions, reconcile your accounts, and review your books.
If you are using LZ Books, follow these steps
- Connect your business bank account. We encourage you to link only business bank or credit accounts. This will help you to avoid mixing any personal transactions into your books.
- Categorize your transactions. LZ Books is designed to recognize and suggest categories for you based on the income and expense information it receives from your bank. Make sure you review the suggested category to ensure it is correct.
- Enter cash income and expenses. Be sure to manually enter and categorize any out-of-pocket business expenses. Just because an expense did not come from your business bank account does not mean it is not an allowable deduction. For example, many business owners have to pay for business formation documents using personal funds. These need to be entered into your LZ Books account.
- Reach out for help. If you have any questions, reach out to the Product Support team by clicking on the black chat bubble shown in the corner of any LZ Books screen.
If you are using QuickBooks Online, follow these steps
1. Make sure all your income and expense transactions are recorded. Here are some links to help you do this:
2. Has everything been recorded? The next step is to “reconcile your accounts."
3. Now that you are reconciled, it's time to review your Profit and Loss Report. This video below will help you get started:
Connect with your tax expert
Reach out to a tax expert regularly—especially toward the end of the year—to discuss how to get the best possible tax outcome and other potential recommendations, such as making quarterly estimated tax payments.
Find out more about Business Taxes